What should be in a B2B contract under Polish law?

 

Disclaimer: this article was written from perspective of Polish law, it may not be applicable for other EU countries or contracts governed by common-law.

A B2B contract, or a contract between two companies (ak business-to-business) is quite common in Poland. It applies to both big and small projects, allows you to hire small companies, usually self-employed professionals/entrepreneurs (programmers, lawyers, doctors, etc.) as well as to cooperate with a large corporation.

Simple but not quite …

Such agreement is also both simple and sophisticated at the same time. Simple because business contracts have very little limitations as they are not constrained by the Labour Code, nor do they have to worry about consumer protection regulations (clients who are not entrepreneurs) although there are some exceptions under Polish law. And since there are no dedicated provisions for B2B contracts under Polish law, we mostly use the fairly simple mandate provisions for them (under Polish law mandate is a kind of contract to take care of someone’s affairs, its provisions are used as general rule for most B2B agreements). Therefore, in theory, it is enough that contract does not break the basic rules of Polish to not cause problems. But it is precisely the lack of dedicated provisions that makes a B2B contract complicated in practice. If something isn’t in the contract then you won’t get it (e.g. if in the contract with the electrician, there’s nothing about an installation schematic then he won’t give it to you) or worse, you won’t know what to do if there’s no information about it in the contract – if there’s a mising termination clasue, well then a lot of problems arise, such basic ones are:

• Can you terminate the contract? You may find that you can’t and you have to abide by it (e.g. continue to pay for sevices or provide work for the client) for the next year.
• How long is the notice period? None (the contract ends immediately), a week, a month? That’s tricky question.
• How do you actually terminate the contract then? By sendind email, registered post, text message?

Although there are no dedicated provisions for B2B contracts, there are, however, provisions for specific types of contracts. Hence, civil law will ‘put’ into your contract specific clausues as what you have not written in the contract is regulated by a specific provision from the Civil Code, e.g. many contracts for the development of an application or a website are, in the eyes of the law, contracts for specific work (so called contract for result), even if they are B2B contracts. Thus, it is better to write your rules than to be surprised by a rules from Civil Code, provided, of course, that the law allows you to alter Ciliv Code rules (for more on the problems with a works contract, see the link).

Important elements in a B2B contract

In my experience, in a contract for a business you always need to keep these things in mind:

• Who is contracting with whom – you need to describe this well, I know it seems simple, but I have seen too many mistakes here:
  • Civil partnerships and sp.k. with sp. z o.o. as pertner are the hardest to describe correctly. (this kind of company of limited partnership in which the limited liability company is the general partner) – with these types of companies there are a lot of mistakes to make.
  • Always write the full name – if you write that it is an agreement between a Software company and an ABC company without specifying whether it is an S.A. or sp. z o.o., without NIP No (Polish Tax ID) or KRS NO (registrater of companies) it will be a problem. There may be several companies, e.g. Software sp. z o.o. and Software S.A., but it may also turn out that Software is not a full name and there are several companies, e.g. Software Toruń z o.o. or Software for Business sp. z o.o. In an extreme case, Software may not be a name of a company but its brand, just as Plus is a brand of a Polish telecommunication carrier, but the company which operates under this brand is named and registered as Polkomtel sp. z o.o.
• Who signs the contract for the company – fora sp. z o.o. the contract is signed by the board memebers in line with rules published in Krajowy Rejestr Sądowy (KRS) and for example this may require the signatures of two board members instead of one, each company has its own specifics as to who can sign a contract.
• What contract is about – make sure you have a good description of the scope i.e. the goods or services. A simple description A company will make a website for ABC company without writing that this website has to have a contact form, a blog and sub-pages with a description of services will mean that you may get a simple one-pager which is not what you were hoping for.
• Remuneration and payment – describe in detail the mechanism for calculating remuneration (hourly rate, fixed rate) and payment deadlines. If you are carrying out a larger project for a client that will take a little longer divide it into stages and write down what amount you will get for each stage.
• Handover – it doesn’t matter if it’s a contract for a physical product, service or software, describe what the handover will look like, how and by when to make comments, etc.
• Deadlines – write into the contract all the important dates and deadlines e.g. date for invoicing, period of cooperation, when the contract starts, deadline for payment, time for comments or complaints, deadline for handover etc.
• Communication – establish how you will communicate during the collaboration, designate the people who can make decisions e.g. set a deadline for handover of the app, provide e-mail addresses (i.e. write down one for complaints and anotjer for invoices).

• Amendments – always describe the basic conditions for amending the contract, e.g. establish that it must be a written addendum. This will help you avoid misunderstandings.
• Termination or renunciation – specify whether the contract can be terminated during, under what conditions, you can add specific situations, e.g. if the customer does not pay on time, the supplier does not stick to the schedule, etc.

Optional elements of the contract between businesses

You can also include other elements in the contract if they are actually needed, including:

• Confidentiality (non disclosure) – add a clause or sign a separate non-disclosure agreement so you can protect company secrets (e.g. customer databases, margins, supply channels, software code), more about such an agreement at this link.
• Non-compete agreement (NCA) – if you use a subcontractor a non-compete will ensure that they do not take over your clients.
• Dedicated court – you can write into the contract in which court the trial between you will take place.
• Applicable law – if you are contracting with a foreign company or for some reason, you want to choose the law of a specific country.
• Contractual damages – this is quite a sensitive topic, but sometimes you need them, I think it is inappropriate to use broadly contractual damages, but there are a few situations where they are useful, mainly for violations of confidentiality and non-competition.
• Personal data processing – this is something I prefer to sign as a separate contract or annex, you will need it if the service is related to personal data, especially if the contract covers SaaS, hosting, accounting, HR services, etc.

Not sure what is important for your contract? Write to me, I help business in IT and other sectors.